Selected financial results at or for the three months ended
- The return on average assets and average equity were 0.69% and 10.21%, respectively.
- Tax-equivalent net interest margin (non-GAAP) ("net interest margin") was 3.29%.
- Total loans increased 5% compared to
September 30, 2023 , and 12% compared toDecember 31, 2022 . - Total deposits decreased 2% compared to
September 30, 2023 , and 1% compared toDecember 31, 2022 . - Wealth assets under management and administration amounted to
$1 .3 billion and increased 10% compared toSeptember 30, 2023 , and 21% compared toDecember 31, 2022 .
Chief Executive Officer
Executive Chairman & Founder
Net Interest Income
Net interest income for the three months ended
Net Interest Margin
Three months ended –
Net interest margin was 3.29% for the three months ended
Net interest margin compared to the prior quarter was impacted by the following factors:
- Average interest-earning deposits with banks decreased
$88.3 million , or 34%, while the yield increased 12 basis points. - Average loan balances increased
$95.2 million , or 3%, and the tax-equivalent yield increased 11 basis points. - Average total deposits decreased
$25.2 million , or 1%, while the yield increased 30 basis points.
Three months ended –
Net interest margin was 3.29% for the three months ended
Net interest margin compared to the prior year quarter was impacted by the following factors:
- Average interest-earning deposits with banks decreased
$188.5 million , or 53%, while the yield increased 168 basis points. - Average debt securities decreased
$155.9 million , or 16%, while the tax-equivalent yield increased 5 basis points. - Average loan balances increased
$349.6 million , or 11%, and the tax-equivalent yield increased 54 basis points. - Average total deposits decreased
$33.3 million , or 1%, while the yield increased 125 basis points.
The decrease in net interest margin over the respective periods was due primarily to an increase in deposit costs that exceeded the increase in loan yields. Deposit costs increased due to higher market and competitor interest rates as well as a change in mix, as deposits migrated from lower yielding checking and savings products into higher yielding money market and certificate of deposit products compared to the respective periods. In addition, the Company experienced strong loan growth over the respective periods, funded primarily by interest-earning deposits with banks, investment cash flows including the sale of debt securities in
Provision for Credit Losses
The provision for credit losses for the three months ended
Non-Interest Income
Non-interest income for the three months ended
Non-Interest Expense
Non-interest expense for the three months ended
Income Taxes
The effective tax rate was 30.3% and 24.7% for the three months ended
Balance Sheet
Total assets amounted to
Total interest-earning deposits with banks, which consist of overnight and short-term investments, amounted to
Total investment securities at fair value amounted to
Total loans amounted to
Total deposits amounted to
Total shareholders' equity amounted to
Credit Quality
Selected credit quality metrics at
- The ACL for loans amounted to
$59.0 million , or 1.65% of total loans, compared to$52.6 million , or 1.66% of total loans. - The reserve for unfunded commitments (included in other liabilities) amounted to
$7.1 million , compared to$4.3 million . - Non-performing loans amounted to
$11.4 million , or 0.32% of total loans, compared to$6.1 million , or 0.19% of total loans. The increase resulted primarily from one individually evaluated commercial relationship downgraded in the third quarter of 2023, which was partially offset by principal pay-downs and credit upgrades.
Wealth Management
Wealth assets are not carried as assets on the Company's consolidated balance sheets.
Wealth assets under management amounted to
Wealth assets under administration amounted to
About
Forward-Looking Statements
This earnings release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by references to a future period or periods or by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," "could," "plan," and other similar terms or expressions. Forward-looking statements should not be relied on because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties, and other factors may cause the actual results, performance, and achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed in, or implied by, the forward-looking statements. Factors that could cause such differences include, but are not limited to, the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; potential recession in
ENTERPRISE BANCORP, INC. Consolidated Balance Sheets (unaudited) | ||||||||
(Dollars in thousands, except per share data) | 2023 | 2022 | ||||||
Assets | ||||||||
Cash and cash equivalents: | ||||||||
Cash and due from banks | $ | 37,443 | $ | 36,901 | ||||
Interest-earning deposits with banks | 19,149 | 230,688 | ||||||
Total cash and cash equivalents | 56,592 | 267,589 | ||||||
Investments: | ||||||||
Debt securities at fair value (amortized cost of | 661,113 | 816,102 | ||||||
Equity securities at fair value | 7,058 | 4,269 | ||||||
Total investment securities at fair value | 668,171 | 820,371 | ||||||
2,402 | 2,343 | |||||||
Loans held for sale | 200 | — | ||||||
Loans: | ||||||||
Total loans | 3,567,631 | 3,180,518 | ||||||
Allowance for credit losses | (58,995 | ) | (52,640 | ) | ||||
Net loans | 3,508,636 | 3,127,878 | ||||||
Premises and equipment, net | 44,931 | 44,228 | ||||||
Lease right-of-use asset | 24,820 | 24,923 | ||||||
Accrued interest receivable | 19,233 | 17,117 | ||||||
Deferred income taxes, net | 49,166 | 51,981 | ||||||
Bank-owned life insurance | 65,455 | 64,156 | ||||||
Prepaid income taxes | 1,589 | 683 | ||||||
Prepaid expenses and other assets | 19,183 | 11,408 | ||||||
5,656 | 5,656 | |||||||
Total assets | $ | 4,466,034 | $ | 4,438,333 | ||||
Liabilities and Shareholders' Equity | ||||||||
Liabilities | ||||||||
Deposits | $ | 3,977,521 | $ | 4,035,806 | ||||
Borrowed funds | 25,768 | 3,216 | ||||||
Subordinated debt | 59,498 | 59,182 | ||||||
Lease liability | 24,441 | 24,415 | ||||||
Accrued expenses and other liabilities | 45,011 | 31,442 | ||||||
Accrued interest payable | 4,678 | 2,005 | ||||||
Total liabilities | 4,136,917 | 4,156,066 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 123 | 121 | ||||||
Additional paid-in capital | 107,377 | 103,793 | ||||||
Retained earnings | 301,380 | 274,560 | ||||||
Accumulated other comprehensive loss | (79,763 | ) | (96,207 | ) | ||||
Total shareholders' equity | 329,117 | 282,267 | ||||||
Total liabilities and shareholders' equity | $ | 4,466,034 | $ | 4,438,333 |
ENTERPRISE BANCORP, INC. Consolidated Statements of Income (unaudited) | |||||||||||||||
Three months ended | Year ended | ||||||||||||||
(Dollars in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Interest and dividend income: | |||||||||||||||
Loans and loans held for sale | $ | 46,680 | $ | 37,785 | $ | 172,535 | $ | 135,934 | |||||||
Investment securities | 4,219 | 4,868 | 18,575 | 18,965 | |||||||||||
Other interest-earning assets | 2,350 | 3,372 | 9,943 | 6,014 | |||||||||||
Total interest and dividend income | 53,249 | 46,025 | 201,053 | 160,913 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 15,821 | 2,980 | 44,389 | 5,711 | |||||||||||
Borrowed funds | 43 | 13 | 113 | 52 | |||||||||||
Subordinated debt | 867 | 867 | 3,467 | 3,352 | |||||||||||
Total interest expense | 16,731 | 3,860 | 47,969 | 9,115 | |||||||||||
Net interest income | 36,518 | 42,165 | 153,084 | 151,798 | |||||||||||
Provision for credit losses | 2,493 | 1,861 | 9,249 | 5,800 | |||||||||||
Net interest income after provision for credit losses | 34,025 | 40,304 | 143,835 | 145,998 | |||||||||||
Non-interest income: | |||||||||||||||
Wealth management fees | 1,797 | 1,568 | 6,730 | 6,533 | |||||||||||
Deposit and interchange fees | 2,145 | 2,349 | 8,475 | 8,196 | |||||||||||
Income on bank-owned life insurance, net | 314 | 309 | 1,264 | 1,202 | |||||||||||
Net losses on sales of debt securities | — | (3,035 | ) | (2,419 | ) | (1,973 | ) | ||||||||
Net gains on sales of loans | — | — | 34 | 30 | |||||||||||
Net gain on sale of insurance commissions | — | 2,034 | — | 2,034 | |||||||||||
Gains (losses) on equity securities | 674 | 174 | 666 | (514 | ) | ||||||||||
Other income | 617 | 811 | 2,859 | 2,954 | |||||||||||
Total non-interest income | 5,547 | 4,210 | 17,609 | 18,462 | |||||||||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | 18,468 | 18,670 | 72,283 | 72,120 | |||||||||||
Occupancy and equipment expenses | 2,283 | 2,317 | 9,722 | 9,299 | |||||||||||
Technology and telecommunications expenses | 2,719 | 2,581 | 10,656 | 10,735 | |||||||||||
Advertising and public relations expenses | 709 | 1,021 | 2,786 | 2,758 | |||||||||||
Audit, legal and other professional fees | 788 | 871 | 2,945 | 2,949 | |||||||||||
Deposit insurance premiums | 768 | 470 | 2,712 | 1,783 | |||||||||||
Supplies and postage expenses | 245 | 249 | 998 | 912 | |||||||||||
Other operating expenses | 2,244 | 1,988 | 8,097 | 7,758 | |||||||||||
Total non-interest expense | 28,224 | 28,167 | 110,199 | 108,314 | |||||||||||
Income before income taxes | 11,348 | 16,347 | 51,245 | 56,146 | |||||||||||
Provision for income taxes | 3,441 | 4,041 | 13,187 | 13,430 | |||||||||||
Net income | $ | 7,907 | $ | 12,306 | $ | 38,058 | $ | 42,716 | |||||||
Basic earnings per common share | $ | 0.64 | $ | 1.01 | $ | 3.11 | $ | 3.53 | |||||||
Diluted earnings per common share | $ | 0.64 | $ | 1.01 | $ | 3.11 | $ | 3.52 | |||||||
Basic weighted average common shares outstanding | 12,261,918 | 12,128,019 | 12,223,626 | 12,103,033 | |||||||||||
Diluted weighted average common shares outstanding | 12,276,769 | 12,168,753 | 12,244,036 | 12,149,777 |
ENTERPRISE BANCORP, INC. Selected Consolidated Financial Data and Ratios (unaudited) | ||||||||||||||||||||
At or for the three months ended | ||||||||||||||||||||
(Dollars in thousands, except per share data) | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Total cash and cash equivalents | $ | 56,592 | $ | 225,421 | $ | 258,825 | $ | 215,693 | $ | 267,589 | ||||||||||
Total investment securities at fair value | 668,171 | 678,932 | 712,851 | 830,895 | 820,371 | |||||||||||||||
Total loans | 3,567,631 | 3,404,014 | 3,345,667 | 3,230,156 | 3,180,518 | |||||||||||||||
Allowance for credit losses | (58,995 | ) | (57,905 | ) | (56,899 | ) | (55,002 | ) | (52,640 | ) | ||||||||||
Total assets | 4,466,034 | 4,482,374 | 4,502,344 | 4,441,896 | 4,438,333 | |||||||||||||||
Total deposits | 3,977,521 | 4,060,403 | 4,075,598 | 4,016,156 | 4,035,806 | |||||||||||||||
Subordinated debt | 59,498 | 59,419 | 59,340 | 59,261 | 59,182 | |||||||||||||||
Total shareholders' equity | 329,117 | 299,699 | 307,490 | 311,318 | 282,267 | |||||||||||||||
Total liabilities and shareholders' equity | 4,466,034 | 4,482,374 | 4,502,344 | 4,441,896 | 4,438,333 | |||||||||||||||
Wealth Management | ||||||||||||||||||||
Wealth assets under management | $ | 1,077,761 | $ | 984,647 | $ | 1,009,386 | $ | 930,714 | $ | 891,451 | ||||||||||
Wealth assets under administration | $ | 242,338 | $ | 211,046 | $ | 214,116 | $ | 206,569 | $ | 198,586 | ||||||||||
Shareholders' Equity Ratios | ||||||||||||||||||||
Book value per common share | $ | 26.82 | $ | 24.45 | $ | 25.11 | $ | 25.47 | $ | 23.26 | ||||||||||
Dividends paid per common share | $ | 0.230 | $ | 0.230 | $ | 0.230 | $ | 0.230 | $ | 0.205 | ||||||||||
Regulatory Capital Ratios | ||||||||||||||||||||
Total capital to risk weighted assets | 13.12 | % | 13.45 | % | 13.37 | % | 13.55 | % | 13.49 | % | ||||||||||
Tier 1 capital to risk weighted assets(1) | 10.34 | % | 10.61 | % | 10.52 | % | 10.64 | % | 10.56 | % | ||||||||||
Tier 1 capital to average assets | 8.74 | % | 8.59 | % | 8.62 | % | 8.47 | % | 8.10 | % | ||||||||||
Credit Quality Data | ||||||||||||||||||||
Non-performing loans | $ | 11,414 | $ | 11,656 | $ | 7,647 | $ | 7,532 | $ | 6,122 | ||||||||||
Non-performing loans to total loans | 0.32 | % | 0.34 | % | 0.23 | % | 0.23 | % | 0.19 | % | ||||||||||
Non-performing assets to total assets | 0.26 | % | 0.26 | % | 0.17 | % | 0.17 | % | 0.14 | % | ||||||||||
ACL for loans to total loans | 1.65 | % | 1.70 | % | 1.70 | % | 1.70 | % | 1.66 | % | ||||||||||
Net charge-offs (recoveries) | $ | 15 | $ | (12 | ) | $ | 146 | $ | (44 | ) | $ | 166 | ||||||||
Income Statement Data | ||||||||||||||||||||
Net interest income | $ | 36,518 | $ | 38,502 | $ | 38,093 | $ | 39,971 | $ | 42,165 | ||||||||||
Provision for credit losses | 2,493 | 1,752 | 2,268 | 2,736 | 1,861 | |||||||||||||||
Total non-interest income | 5,547 | 4,486 | 2,819 | 4,757 | 4,210 | |||||||||||||||
Total non-interest expense | 28,224 | 28,312 | 25,623 | 28,040 | 28,167 | |||||||||||||||
Income before income taxes | 11,348 | 12,924 | 13,021 | 13,952 | 16,347 | |||||||||||||||
Provision for income taxes | 3,441 | 3,225 | 3,337 | 3,184 | 4,041 | |||||||||||||||
Net income | $ | 7,907 | $ | 9,699 | $ | 9,684 | $ | 10,768 | $ | 12,306 | ||||||||||
Income Statement Ratios | ||||||||||||||||||||
Diluted earnings per common share | $ | 0.64 | $ | 0.79 | $ | 0.79 | $ | 0.88 | $ | 1.01 | ||||||||||
Return on average total assets | 0.69 | % | 0.85 | % | 0.88 | % | 0.99 | % | 1.08 | % | ||||||||||
Return on average shareholders' equity | 10.21 | % | 12.53 | % | 12.63 | % | 14.67 | % | 18.08 | % | ||||||||||
Net interest margin (tax-equivalent)(2) | 3.29 | % | 3.46 | % | 3.55 | % | 3.76 | % | 3.81 | % |
(1) Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.
(2) Tax-equivalent net interest margin is net interest income adjusted for the tax-equivalent effect associated with tax-exempt loan and investment income, expressed as a percentage of average interest-earning assets.
ENTERPRISE BANCORP, INC.
Consolidated Loan and Deposit Data
(unaudited)
Major classifications of loans at the dates indicated were as follows:
(Dollars in thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
Commercial real estate | $ | 2,064,737 | $ | 2,032,458 | $ | 2,009,263 | $ | 1,929,544 | $ | 1,921,410 | ||||||||||
Commercial and industrial | 430,749 | 425,334 | 420,095 | 423,864 | 414,490 | |||||||||||||||
Commercial construction | 585,113 | 501,179 | 487,018 | 456,735 | 424,049 | |||||||||||||||
Total commercial loans | 3,080,599 | 2,958,971 | 2,916,376 | 2,810,143 | 2,759,949 | |||||||||||||||
Residential mortgages | 393,142 | 362,514 | 346,523 | 335,834 | 332,632 | |||||||||||||||
Home equity loans and lines | 85,375 | 74,433 | 74,374 | 75,809 | 79,807 | |||||||||||||||
Consumer | 8,515 | 8,096 | 8,394 | 8,370 | 8,130 | |||||||||||||||
Total retail loans | 487,032 | 445,043 | 429,291 | 420,013 | 420,569 | |||||||||||||||
Total loans | 3,567,631 | 3,404,014 | 3,345,667 | 3,230,156 | 3,180,518 | |||||||||||||||
ACL for loans | (58,995 | ) | (57,905 | ) | (56,899 | ) | (55,002 | ) | (52,640 | ) | ||||||||||
Net loans | $ | 3,508,636 | $ | 3,346,109 | $ | 3,288,768 | $ | 3,175,154 | $ | 3,127,878 |
Deposits are summarized as follows as of the periods indicated:
(Dollars in thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
Non-interest checking | $ | 1,070,104 | $ | 1,130,732 | $ | 1,273,968 | $ | 1,247,253 | $ | 1,361,588 | ||||||||||
Interest-bearing checking | 697,632 | 727,817 | 701,701 | 641,194 | 678,715 | |||||||||||||||
Savings | 285,770 | 290,363 | 310,321 | 297,790 | 326,666 | |||||||||||||||
Money market | 1,402,939 | 1,434,036 | 1,373,816 | 1,454,858 | 1,381,645 | |||||||||||||||
CDs | 295,789 | 262,975 | 244,114 | 222,116 | 187,758 | |||||||||||||||
CDs greater than | 225,287 | 214,480 | 171,678 | 152,945 | 99,434 | |||||||||||||||
Deposits | $ | 3,977,521 | $ | 4,060,403 | $ | 4,075,598 | $ | 4,016,156 | $ | 4,035,806 |
ENTERPRISE BANCORP, INC.
Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
(unaudited)
The following table presents the Company's average balance sheets, net interest income and average rates for the periods indicated:
Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest(1) | Average Yield(1) | Average Balance | Interest(1) | Average Yield(1) | Average Balance | Interest(1) | Average Yield(1) | ||||||||||||||||||
Assets: | |||||||||||||||||||||||||||
Loans and loans held for sale(2) (tax-equivalent) | $ | 3,467,945 | $ | 46,824 | 5.36 | % | $ | 3,372,754 | $ | 44,644 | 5.25 | % | $ | 3,118,304 | $ | 37,895 | 4.82 | % | |||||||||
Investment securities(3) (tax-equivalent) | 799,093 | 4,345 | 2.17 | % | 820,156 | 4,444 | 2.17 | % | 952,975 | 5,099 | 2.14 | % | |||||||||||||||
Other interest-earning assets(4) | 172,167 | 2,350 | 5.42 | % | 260,475 | 3,468 | 5.28 | % | 360,557 | 3,372 | 3.71 | % | |||||||||||||||
Total interest-earnings assets (tax-equivalent) | 4,439,205 | 53,519 | 4.79 | % | 4,453,385 | 52,556 | 4.69 | % | 4,431,836 | 46,366 | 4.16 | % | |||||||||||||||
Other assets | 78,102 | 82,190 | 71,289 | ||||||||||||||||||||||||
Total assets | $ | 4,517,307 | $ | 4,535,575 | $ | 4,503,125 | |||||||||||||||||||||
Liabilities and stockholders' equity: | |||||||||||||||||||||||||||
Non-interest checking | $ | 1,155,307 | — | $ | 1,195,658 | — | $ | 1,442,108 | — | ||||||||||||||||||
Interest checking, savings and money market | 2,427,089 | 10,786 | 1.76 | % | 2,481,814 | 9,185 | 1.47 | % | 2,413,646 | 2,211 | 0.36 | % | |||||||||||||||
CDs | 500,286 | 5,035 | 3.99 | % | 430,376 | 3,704 | 3.41 | % | 260,265 | 769 | 1.17 | % | |||||||||||||||
Total deposits | 4,082,682 | 15,821 | 1.54 | % | 4,107,848 | 12,889 | 1.24 | % | 4,116,019 | 2,980 | 0.29 | % | |||||||||||||||
Borrowed funds | 7,572 | 43 | 2.24 | % | 4,938 | 28 | 2.30 | % | 2,999 | 13 | 1.69 | % | |||||||||||||||
Subordinated debt(5) | 59,451 | 867 | 5.83 | % | 59,372 | 866 | 5.84 | % | 59,132 | 867 | 5.86 | % | |||||||||||||||
Total funding liabilities | 4,149,705 | 16,731 | 1.60 | % | 4,172,158 | 13,783 | 1.31 | % | 4,178,150 | 3,860 | 0.37 | % | |||||||||||||||
Other liabilities | 60,376 | 56,414 | 54,922 | ||||||||||||||||||||||||
Total liabilities | 4,210,081 | 4,228,572 | 4,233,072 | ||||||||||||||||||||||||
Stockholders' equity | 307,226 | 307,003 | 270,053 | ||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,517,307 | $ | 4,535,575 | $ | 4,503,125 | |||||||||||||||||||||
Net interest-rate spread (tax-equivalent) | 2.57 | % | 2.85 | % | 3.60 | % | |||||||||||||||||||||
Net interest income (tax-equivalent) | 36,788 | 38,773 | 42,506 | ||||||||||||||||||||||||
Net interest margin (tax-equivalent) | 3.29 | % | 3.46 | % | 3.81 | % | |||||||||||||||||||||
Less tax-equivalent adjustment | 270 | 271 | 341 | ||||||||||||||||||||||||
Net interest income | $ | 36,518 | $ | 38,502 | $ | 42,165 | |||||||||||||||||||||
Net interest margin | 3.27 | % | 3.43 | % | 3.78 | % |
(1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a
(2) Average loans and loans held for sale are presented at average amortized cost and include non-accrual loans.
(3) Average investments are presented at average amortized cost.
(4) Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and FHLB stock.
(5) Subordinated debt is net of average deferred debt issuance costs.
ENTERPRISE BANCORP, INC.
Non-GAAP Financial Measures and Reconciliations
(unaudited)
NON-GAAP MEASURES
The accompanying unaudited consolidated interim financial statements have been prepared in accordance with GAAP. However, certain financial measures we present are supplemental measures that are not required by or are not presented in accordance with GAAP. These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. In addition, the non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies; therefore, these measures may not be comparable to other similarly titled measures as presented by other companies.
The following tables summarize the reconciliation of GAAP to non-GAAP measures related to the impact of PPP loans on total loans:
(Dollars in thousands) | 2023 | 2022 | 2021 | |||||||||
Total Loans, Excluding PPP Loans | ||||||||||||
Total loans | $ | 3,567,631 | $ | 3,180,518 | $ | 2,920,684 | ||||||
Adjustment: PPP loans | — | — | (71,502 | ) | ||||||||
Total loans, excluding PPP loans (non-GAAP) | $ | 3,567,631 | $ | 3,180,518 | $ | 2,849,182 | ||||||
Total loan growth, excluding PPP loans (non-GAAP) | 12.2 | % | 11.6 | % |
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